SANTA CRUZ — Making good on promises to throw a large net around the city’s housing shortage crisis, Santa Cruz is set to loosen rules for housing construction.

Two parts of the city’s housing blueprint subcommittee’s report are advancing: a loosening of accessory dwelling unit regulations and more incentives for developers, including decreased affordable housing requirements.

On Thursday night, the city Planning Department drew a standing-room-only crowd of more than 70 people to hear the first draft of suggested changes for accessory dwelling unit or granny flat construction. Some significant ideas offered by city officials included:

Eliminating parking requirements for the first granny flat addition to a parcel.

These and other recommended changes to city laws, colored by input from community members Thursday who filled out comment cards, are scheduled to go before the city Planning Commission at a meeting Oct. 18, and to the Santa Cruz City Council as early as Nov. 13.

Additional proposed changes to city granny flat laws are not up for debate and will be required by law, such as eliminating public hearing requirements, allowing granny flats in all residential zones, removing minimum parcel size rules and removing parking requirements for granny flats attached to the main house or converted from other uses.

Santa Cruz County, meanwhile, is considering a three-year pilot program to offer incentives for small ADUs that would waive a majority of permitting and other fees, adding up to $11,000 on average.

Asked if the city is considering something similar, Sarah Neuse, a senior city planner, told Thursday’s meeting attendees that the city is taking a step back on reducing permitting fees in order to observe effectiveness of the county’s effort.

Santa Cruz Green Builders co-owner Taylor Darling said the main concern he hears from those looking to add a granny flat is the cost. He suggested to Neuse standardizing some granny unit engineered plans that easily reach $15,000 to $20,000, or waiving some of the expert reports required from everyone from arborists to soil experts.

City plans to reduce developer requirements for including affordable housing units is further along, earning the first of two needed Santa Cruz City Council approvals at a meeting on Tuesday.

At the council meeting, city Planning Director Lee Butler said desperately needed affordable housing comes hand-in-hand with market-rate development. With the loss of local Redevelopment Agency funding as an incentive to affordable housing development, the city needs to look to other tools to increase its supply, he said.

Butler framed the city’s housing supply shortage in terms of new development: Developers have added an average of five new market-rate rental units a year for the past 22 years, for a total of 106 units.

“That is the problem,” Butler said. “When we talk about housing affordability, when we talk about availability of housing, this right here expresses a large part of what we’re trying to address.”

Butler’s presentation to the council, related to so-called city “inclusionary housing” requirements, focused on areas where he and his staff differed from the city Planning Commission’s consensus. He also highlighted a change that has earned pushback from affordable housing advocates: reducing the percentage of affordable units market-rate developers outside the downtown are required to include. Currently, all developers are asked to make at least 15 percent of their units rent-restricted. Going forward, development outside the downtown could go to as low as 10 percent of their units.

For council members Chris Krohn and Sandy Brown, who voted in the minority against the entire package of code updates, the reduced affordability requirements was a major sticking point. Krohn commended the effort to close loopholes and create more housing, but said the steps do not go far enough.

“You might want to create more housing, but not all housing is equal and I don’t think we’re creating near enough affordable housing,” Krohn said.

Councilwoman Richelle Noroyan said, she too, was put off by the affordability reduction, but was swayed by the small number of new market-rate developments in the past two decades.

“We do need market rate and we definitely need affordable,” Noroyan said. “I would love to be able to put more on the shoulders of the developers to provide this, but the realities just don’t bear that out.”

Requiring for-sale housing projects to include the same number of affordable housing units otherwise required while in a holding pattern as rental units. Current code excludes rental projects from affordability requirements until the first condo is sold.

Allowing developers to build affordable units offsite, at a rate 30 percent higher than onsite and within 18 months of the main project’s construction.